Are Rackets really where the $$ is?

RVAtennisaddict

Professional
I am just wondering about the finances of Tennis: where does most of the revenue for Tennis companies come from?

My guess is that it is from the clothing, shoes, and balls -- things that they have much more volume of even for "casual" players, and not the rackets. Rackets only help drive the sales of the "more profitable" portions.. and this may explain the reluctance to do more with racket development and decreasing number of lines.
 

esgee48

G.O.A.T.
It would be interesting if companies reported profit/cost by item or grouping, e.g. balls, shoes, frames, strings, clothes. However, that is probably confidential data. Frames would be classified as durable items by most, but they're probably an expense by the company since they can make the argument that a new line comes out every 2-3 years. [sarcasm!] My guess is the order of profitability is strings/balls, shoes, clothes followed by frames. As far as revenue, that would depend on what they sell, but my guess would follow in similar order. This assumes we are not talking about racquetholics, but someone who is rational about buying frames. :p
 

CopolyX

Hall of Fame
Yep apparel/shoes and "balls"!

fairly current facts:
http://www.tennisuniversity.org/kb/state-of-the-tennis-industry/
http://www.tennisindustry.org/cms/index.cfm/news/tennis-equipment-marketplace-struggles-through-q3/
http://www.tennisindustry.org/cms/i...research-on-participation-equipment-and-more/


They will tell you, you need it - it's way better than last years - you want it and you got to have it - man it looks cool -for whatever they pump out for next each year...buy it now! Do not demo it...
It will just make you play so much better and you will instantly intimidate your opponents with that magic stick!
The Big Three have the $$$ to spend the cake on marketing hype, endorsements that drives sales.....
pied-piper-art.gif



“Always be yourself, express yourself, have faith in yourself, do not go out and look for a successful personality and duplicate it.” – B. L.
 

Booger

Hall of Fame
Apparel and shoes by a country mile. That stuff costs nothing to make in some far flung factory and we all buy a lot of it. Why do you think they are the only items that ever go on sale?

Balls are too low margin. Racquets are high margin, but relatively low volume. The big brands (Nike) don't even bother with equipment.
 

Zoolander

Hall of Fame
Dont i remember someone a while back posting a catalogue showing the prices retailers paid the manufacturer? Was around $100 a racquet? So the margins might be good but daependant on how many they sell i guess.
 

thefederman

Rookie
^^^ having worked in the industry for a long time, I can say racquets are not high margin. Balls and frames are low margin, strings/stringing labour, clothing and shoes are where margin is made
 

lwto

Hall of Fame
^^^ having worked in the industry for a long time, I can say racquets are not high margin. Balls and frames are low margin, strings/stringing labour, clothing and shoes are where margin is made

clothing and attire is a loss and really only works online I think. Tennis attire tends to be a fashion thing and it changes so much and you need all sizes and really is a night mare for the street front store. At the end of the season, you have racks of crap that you have to heavily discount and what ever profits you made, are really gone. We stopped carrying clothing and concentrated on shoes.. and like you say, stringing.
 

gino

Legend
Yep apparel/shoes and "balls"!

fairly current facts:
http://www.tennisuniversity.org/kb/state-of-the-tennis-industry/
http://www.tennisindustry.org/cms/index.cfm/news/tennis-equipment-marketplace-struggles-through-q3/
http://www.tennisindustry.org/cms/i...research-on-participation-equipment-and-more/


They will tell you, you need it - it's way better than last years - you want it and you got to have it - man it looks cool -for whatever they pump out for next each year...buy it now! Do not demo it...
It will just make you play so much better and you will instantly intimidate your opponents with that magic stick!
The Big Three have the $$$ to spend the cake on marketing hype, endorsements that drives sales.....
pied-piper-art.gif



“Always be yourself, express yourself, have faith in yourself, do not go out and look for a successful personality and duplicate it.” – B. L.

Agreed on almost all accounts. I think there is merit to demoing new frame molds. But no need to chase a golden ticket to winning sets. That's called practice
 

RVAtennisaddict

Professional
I guess my side point, is if we really new frames and technology, we should be willing to support more (but more frames, or pay more per frame).

And I am sure they make much more on clothes/shoes/socks/balls and even strings... they should probably give away stringers... with the hope we will all get used to having new strings every 7 games
 

movdqa

Talk Tennis Guru
It would be interesting if companies reported profit/cost by item or grouping, e.g. balls, shoes, frames, strings, clothes. However, that is probably confidential data. Frames would be classified as durable items by most, but they're probably an expense by the company since they can make the argument that a new line comes out every 2-3 years. [sarcasm!] My guess is the order of profitability is strings/balls, shoes, clothes followed by frames. As far as revenue, that would depend on what they sell, but my guess would follow in similar order. This assumes we are not talking about racquetholics, but someone who is rational about buying frames. :p

I used to read Nike's financial reports when I owned the company. They would provide breakdowns by product lines. Tennis is a sub-product line. So they're giving you numbers for Basketball, Running and a bunch of other sports that they provide products for. Financial reports are already pretty big and their audience is financial analysts and investors, not the people that actually buy the stuff or are interested in the sports that they provide products for. Breaking down a sport P&L by balls, shoes, socks, and strings is useless for people analyzing the company as those things are really tiny compared to the other big areas. People usually look at those numbers to see where growth is and where there are problems. If there are problems, then it's up to the management of those areas to deal with them.

I bought my frames in 2011/2012. I spend tennis money on court time, tennis balls, strings, stringing, shoes, and finger tape. My tennis clothes (outside of socks) are about ten years old. I think that I'd spend less on racquets than on balls, shoes, and strings, even if I did replace them every three years or so.
 

movdqa

Talk Tennis Guru
clothing and attire is a loss and really only works online I think. Tennis attire tends to be a fashion thing and it changes so much and you need all sizes and really is a night mare for the street front store. At the end of the season, you have racks of crap that you have to heavily discount and what ever profits you made, are really gone. We stopped carrying clothing and concentrated on shoes.. and like you say, stringing.

Sports-related retailers have been hammered the past year. Not included is Sports Authority which received the ultimate hammer.

https://staticseekingalpha.a.ssl.fastly.net/uploads/2017/3/30/saupload_cc4076069771eabbb0b1f8415b8e5fc7.png[img]

I've bought a lot of running gear this year, partly because a lot of my stuff is about 8 years old and starting to fray but mainly because a lot of workout clothes had 80-90 percent discounts the past three months online. I picked up a bunch of New Balance Tech Running Tanks for $8-9 from Joe's New Balance Factory Outlet. They're $17.99 right now with a 50% off discount with free shipping this weekend. Unfortunately the only sizes that they have left are XL and 2XL but I got mine when they had smaller sizes available.
 

ByakuFubuki

Semi-Pro
[...]I bought my frames in 2011/2012. I spend tennis money on court time, tennis balls, strings, stringing, shoes, and finger tape. My tennis clothes (outside of socks) are about ten years old. I think that I'd spend less on racquets than on balls, shoes, and strings, even if I did replace them every three years or so.
Same here. My clothes are still the same as when I started playing a little less than seven years ago. I may buy something new if I really like it and it's cheap enough, and every two-three years my Club gets high quality apparel for a very convenient price, but that's it. Although I try to save on them, shoes, socks and strings eventually consume and balls lose pressure, so there isn't much I can do about it, and without court time gear would be pointless.

I'm surprised at how much your Racquets are lasting anyway. I got mine in 2014 and they're all worn out. Hopefully they'll last at least another couple of years. They're out of production and I hate the idea of switching, but for once I'd like not to have all of them break.
 

movdqa

Talk Tennis Guru
I'm surprised at how much your Racquets are lasting anyway. I got mine in 2014 and they're all worn out. Hopefully they'll last at least another couple of years. They're out of production and I hate the idea of switching, but for once I'd like not to have all of them break.

I have four of them and they're heavy. The two that were used the most are softer than the other two so there is some wear - and I try to use the other ones more than the worn ones so that they will even out.
 

ByakuFubuki

Semi-Pro
I have four of them and they're heavy. The two that were used the most are softer than the other two so there is some wear - and I try to use the other ones more than the worn ones so that they will even out.
Uhm, makes sense. I have two, but one has a crack on a grommet. It's still playable, but depending on my opponent's shots I may get a lot of vibrations, plus I doubt it would survive a stringing machine, so I'm basically down at one and a half and the "one" gets all the usage. How does weight affect durability?
 

movdqa

Talk Tennis Guru
Uhm, makes sense. I have two, but one has a crack on a grommet. It's still playable, but depending on my opponent's shots I may get a lot of vibrations, plus I doubt it would survive a stringing machine, so I'm basically down at one and a half and the "one" gets all the usage. How does weight affect durability?

TW sells grommets for many frames so you might check to see if you can replace the bad grommet. Some think that it's a good idea to buy spare grommets if they plan on using frames for a long time.

On collisions, think of the damage of a semi hitting a Yugo.

TW still sells grommets for my frames as old as they are.
 

ByakuFubuki

Semi-Pro
TW sells grommets for many frames so you might check to see if you can replace the bad grommet. Some think that it's a good idea to buy spare grommets if they plan on using frames for a long time.

On collisions, think of the damage of a semi hitting a Yugo.

TW still sells grommets for my frames as old as they are.
Thanks, but I meant my frame has a crack which crosses the grommet, thus making it especially "risky" to restring. The grommet itself is fine. Sorry for my awful phrasing.
 

movdqa

Talk Tennis Guru
Thanks, but I meant my frame has a crack which crosses the grommet, thus making it especially "risky" to restring. The grommet itself is fine. Sorry for my awful phrasing.

You could always look on the used market. A lot of players turn racquets over relatively quickly and there's lot of stuff that ends up on the used market. You could look through the TW For Sale forum or ask in the TW Wanted forum. There are a few other places on the internet to look for used frames as well. Sometimes you can find New Old Stock frames on the internet if you don't like to buy used frames.
 

ONgame

Semi-Pro
200 dollars for a racquet isn't really that high as long as you are not the kind that switches racquets every three months.
 

movdqa

Talk Tennis Guru
200 dollars for a racquet isn't really that high as long as you are not the kind that switches racquets every three months.

Fifty-seven percent of Americans don’t have enough cash to cover a $500 unexpected expense, according to a new survey from Bankrate, which interviewed 1,003 adults earlier this month. While that may appear dire, it reflects a slight improvement from 2016, when 63 percent of U.S. residents said they wouldn’t be able to handle such an expense. The improvement reflects the stronger U.S. economy, but is still far from ideal, Bankrate.com said.

http://www.cbsnews.com/news/most-americans-cant-afford-a-500-emergency-expense/
 

Crocodile

G.O.A.T.
A lot depends on the manufacturer in terms of what they have in their inventory and it varies from market to market as well as the relationship and structure they have with their distributors.
Take Yonex for example, in Asian countries they are big in badminton, so that's good for them, however in the last 3 years their racquets are on the rise. In Australia Slazenger tennis balls have been a long time favourite so they do well there. Volkl do very well with Lobster ball machines and Babolat have done will with PD's and Aeros and Wilson owning a string brand along with Tecnifibre are doing well.
 

movdqa

Talk Tennis Guru
So since when did racquet purchases become unexpected expenses?
If you wanna talk about unexpected, strings are much more fitting.

The majority of Americans are under financial stress. Tennis is a luxury sport.

I play with the coach of the local high-school team and he has to provide racquets for some of his players. I play with some folks for which a $200 racquet is a big purchase. For most that I know, it's nothing. But most of the people that I play with are top 10%.
 

ONgame

Semi-Pro
The majority of Americans are under financial stress. Tennis is a luxury sport.

I play with the coach of the local high-school team and he has to provide racquets for some of his players. I play with some folks for which a $200 racquet is a big purchase. For most that I know, it's nothing. But most of the people that I play with are top 10%.

I actually just realized I misunderstood OP's thread entirely. I thought he was complaining about the price of the racquets.
But yes, I agree $200 is expensive, I've been putting off purchaseing an Angell for months now.
Then again, people really need to plan better when making these sorts of purchases anyway.
 

movdqa

Talk Tennis Guru
I actually just realized I misunderstood OP's thread entirely. I thought he was complaining about the price of the racquets.
But yes, I agree $200 is expensive, I've been putting off purchaseing an Angell for months now.
Then again, people really need to plan better when making these sorts of purchases anyway.

Many here buy racquets easily and I imagine that many look at this and are amazed that others have so much disposable income. That's part of the great divide in the US. The internet can bridge that divide when people aren't talking past each other.
 

RVAtennisaddict

Professional
I think my original point was that there probably is not a lot profits in the actual Tennis rackets, but in the other gear: especially ones that wear out faster- shoes, overgrips, strings for example. I also suspect that the clothing is a significant profit source.


So to make rackets more viable for the company (esp development and continuing popular lines)
- increase costs (as high as they can without significantly hurting their sales)
- have several tiers of rackets. I.e. you can buy a player's racket or Fed but expect to really pay
- lower the costs of good rackets to almost nothing and try to rapidly expand the market (counting on profits from the sales of balls, strings, shoes, and clothing to make up the losses on the rackets (loss leaders)
 

movdqa

Talk Tennis Guru
I think my original point was that there probably is not a lot profits in the actual Tennis rackets, but in the other gear: especially ones that wear out faster- shoes, overgrips, strings for example. I also suspect that the clothing is a significant profit source.

So to make rackets more viable for the company (esp development and continuing popular lines)
- increase costs (as high as they can without significantly hurting their sales)
- have several tiers of rackets. I.e. you can buy a player's racket or Fed but expect to really pay
- lower the costs of good rackets to almost nothing and try to rapidly expand the market (counting on profits from the sales of balls, strings, shoes, and clothing to make up the losses on the rackets (loss leaders)

This is what's happening in the cell phone market.
 

Irvin

Talk Tennis Guru
I am just wondering about the finances of Tennis: where does most of the revenue for Tennis companies come from?

My guess is that it is from the clothing, shoes, and balls -- things that they have much more volume of even for "casual" players, and not the rackets. Rackets only help drive the sales of the "more profitable" portions.. and this may explain the reluctance to do more with racket development and decreasing number of lines.
I agree but I don't think balls are a high profit item for the manufacturers. most tennis players don't want to spend more than $2/ can on balls and don't want to open a can unless they have to. I think the distributor makes more money than the manufacturer makes on rackets. Clothing and shoes are probably a big mark up for the manufacturer or Nike would not be in business. Strings, over wraps, and grips are probably where the the tennis frame manufacturer make their money.

EDIT: And the pro shop makes more than the manufacturer makes when they put those strings in a racket with their markup and labor.
 

movdqa

Talk Tennis Guru
I agree but I don't think balls are a high profit item for the manufacturers. most tennis players don't want to spend more than $2/ can on balls and don't want to open a can unless they have to. I think the distributor makes more money than the manufacturer makes on rackets. Clothing and shoes are probably a big mark up for the manufacturer or Nike would not be in business. Strings, over wraps, and grips are probably where the the tennis frame manufacturer make their money.

EDIT: And the pro shop makes more than the manufacturer makes when they put those strings in a racket with their markup and labor.

TW sells regular tennis balls (not practice) from about $2/can to about $4/can if you buy by the case (which is what I do). I've seen those $2 cans sell for $7 at my local club and the US Opens can go for $5 or more at the local stores. So I'd guess that the margins are decent on the more expensive balls and maybe fairly low on the less expensive balls. I buy the Penn ATP balls from TW and my main hitting partner buys US Opens in single cans when they are on sale. We get up to three hours out of the Penn ATPs and up to two hours out of the US Opens. This is indoors. They don't last as long on outdoor courts in our area.

Most of the other people that I play with bring the $2 cans - I don't know whether or not they buy singles or by the case. So I do think that it's likely that far more players buy the inexpensive balls instead of the more expensive balls but there must be enough buying the better balls for TW and other retailers to carry them on their sites and shelves.

My stringer charged me $35 to string three racquets this past week. I was a bit surprised because he usually charges me $15 each. I think that stores charge more - they charge for the string and the stringing is included. My local big-box sporting goods store has been looking for a stringer for quite some time and they're not a current option for me though they would be more convenient. So I think that retailers can make decent margin on stringing and strings. TW provides string and stringing on new racquets inexpensively (sometimes free) so they might not be doing much for margin there.

One thing that always amazes me is the amount of clothing on TW's site. So maybe they are selling a lot of stuff there. TW provides video demonstrations, advice in these forums and fantastic customer service so it might make customers a lot more comfortable buying those things here. What I see in the bricks and mortar world is a ton of store closings already this year. The big ones last week were Payless Shoe going BK and Ralph Lauren closing stores and laying off a lot of workers. The jobs report yesterday indicated that we lost 30,000 retail jobs in March.

http://money.cnn.com/2017/04/07/investing/jobs-report-retailers-losses/
 

DANMAN

Professional
Cost on pure drive 2012s for dealers were like $90. They were making $90 off them when selling for $180. That's a pretty big margin in my book. I'm sure manufacturing a pure drive costs <$10 overall averaged over the number of frames made so I bet the dealer and the manufacturer's profit per frame is pretty good.
 

Irvin

Talk Tennis Guru
Cost on pure drive 2012s for dealers were like $90. They were making $90 off them when selling for $180. That's a pretty big margin in my book. I'm sure manufacturing a pure drive costs <$10 overall averaged over the number of frames made so I bet the dealer and the manufacturer's profit per frame is pretty good.
I can't argue with those points, but how much do you think Babolat pays out for the dozens of pros who enforce their rackets and strings nit to mention all the free rackets and strings they give them ($$$,000,000s.) And how much does it cost Babolat to sponsor all the college and junior players they sponsor? All that eats into the profit margin it takes to manufacturer a racket. And if it cost $10 to manufacturer a complete racket, what do you think the real cost is of the grommets, pallets, butt caps, grips, and strings are? Grommets - $7/set, butt caps - $3, grips $7-$15, strings - $4-$$43, pallets - $10-$20.

The big money for the manufacturer comes from accessories for that racket.
 

movdqa

Talk Tennis Guru
I can't argue with those points, but how much do you think Babolat pays out for the dozens of pros who enforce their rackets and strings nit to mention all the free rackets and strings they give them ($$$,000,000s.) And how much does it cost Babolat to sponsor all the college and junior players they sponsor? All that eats into the profit margin it takes to manufacturer a racket. And if it cost $10 to manufacturer a complete racket, what do you think the real cost is of the grommets, pallets, butt caps, grips, and strings are? Grommets - $7/set, butt caps - $3, grips $7-$15, strings - $4-$$43, pallets - $10-$20.

The big money for the manufacturer comes from accessories for that racket.

He was talking cost to the dealers and we're talking about dealer margins. The manufacturer makes them for $10 and sells them for $90 so the $80 difference has to cover sponsored players, research, development, logistics, and shareholder returns.
 

Irvin

Talk Tennis Guru
He was talking cost to the dealers and we're talking about dealer margins. The manufacturer makes them for $10 and sells them for $90 so the $80 difference has to cover sponsored players, research, development, logistics, and shareholder returns.
The costs to manufacturer a racket may be $10 but that $10 cost can't cover sponsored players, research, development, logistics, etc.

EDIT: do you think QC at some manufacturing plants would be so bad when they make $80 / racket?
 

DANMAN

Professional
The costs to manufacturer a racket may be $10 but that $10 cost can't cover sponsored players, research, development, logistics, etc.

EDIT: do you think QC at some manufacturing plants would be so bad when they make $80 / racket?

Yes because it's as good of QC they can achieve for the right price and profit margin. They don't pay juniors or college players or they'd be ineligible to play in college. Giving away frames for publicity is huge. How many juniors want Pure drives because they saw the local college guys or teaching pros playing with them. People who get the sponsored package as juniors pay like $300 for three rackets and a big bag. They're still making money on this deal.

My original point is that the margin on rackets is good. It doesn't mean the costs associated with promoting them are low.
 

movdqa

Talk Tennis Guru
The costs to manufacturer a racket may be $10 but that $10 cost can't cover sponsored players, research, development, logistics, etc.

EDIT: do you think QC at some manufacturing plants would be so bad when they make $80 / racket?

No. The $80 covers thos other costs.

They're not making $80/racquet. The $80 covers a bunch of other costs.

Take a look at some PK frames. They cost a lot less than other frames. Why? Because they only have Andreas Seppi to pay for, and, no disrespect to Mr. Seppi, but he probably doesn't get as much as Fed, Nadal, Djokovic, Murray, Raonic, Nishikori, Dimitrov, Sverev or Kyrgios. So they may be able to sell frames for $130. And $10 manufacturing, $30 for the other stuff leaving $90 for the distributor/retailer.
 

movdqa

Talk Tennis Guru
Yes because it's as good of QC they can achieve for the right price and profit margin. They don't pay juniors or college players or they'd be ineligible to play in college. Giving away frames for publicity is huge. How many juniors want Pure drives because they saw the local college guys or teaching pros playing with them. People who get the sponsored package as juniors pay like $300 for three rackets and a big bag. They're still making money on this deal.

My original point is that the margin on rackets is good. It doesn't mean the costs associated with promoting them are low.

I've been seeing more Wilson frames lately - RFs (both paint schemes), and PSs - maybe the Federer effect this year. Good results definitely sells frames, particularly if the player is popular. I'm curious as to how well the SW104 is selling as I like the specs on that racquet (head size is a bit big but it's hard to find 28 inch sticks with good swingweight). Serena hasn't been playing quite as well lately too but she's still popular in the US.
 

CopolyX

Hall of Fame
clothing and attire is a loss and really only works online I think. Tennis attire tends to be a fashion thing and it changes so much and you need all sizes and really is a night mare for the street front store. At the end of the season, you have racks of crap that you have to heavily discount and what ever profits you made, are really gone. We stopped carrying clothing and concentrated on shoes.. and like you say, stringing.
>where does most of the revenue for Tennis companies come from?
Stringing? Really...check the main question above again
For you yes...I get it...
For the T companies, I think not...
 

RVAtennisaddict

Professional
Even if they make 100% per racket, how many rackets does the average tennis player buy a year? 1? 0.5? 0.25? Many people have one racket and play it for years... TT people are the exception with our 2-5/year.

They have to make more on the disposables of tennis..
 

movdqa

Talk Tennis Guru
Even if they make 100% per racket, how many rackets does the average tennis player buy a year? 1? 0.5? 0.25? Many people have one racket and play it for years... TT people are the exception with our 2-5/year.

They have to make more on the disposables of tennis..

My doubles partner today asked me my opinion about a crack in his Pure Drive. He was hoping I'd say paint chip but it looked and felt like a crack to me. Another player concurred. So he has two of these now that are cracked out of a set of four. He buys frames used off the auction site so I guess there can be some risk.

Some folks go through racquets faster than others. It's not the same thing as the racquetholics but a source of sales nonetheless.
 

Moveforwardalways

Hall of Fame
Racquets are a form of or variant on a loss leader. There may not be huge margins in racquets, but racquets make the brand, which then sells the stuff with more margin.
 
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